Using a present value table, your calculator, or a computer program present value function, answer the following questions. Assistance is needed with the formula to calculate the problems:
a. What is the present value of nine annual cash payments of $4,000, to be paid at the end of each year using an interest rate of 6%?
b. What is the present value of $15,000 to be paid at the end of 20 years, using an interest rate of 18%?
c. How much cash must be deposited in a savings account as a single amount in order to accumulate $300,000 at the end of 12 years, assuming that the account will earn 10% interest and the interest is reinvested?
d. How much cash must be deposited in a savings account (as a single amount) in order to accumulate $50,000 at the end of seven years, assuming that the account will earn 12% interest and the interest is reinvested"
The solution provides step by step method for the calculation of interest rate under Exponential and Reciprocal Functions . Formula for the calculation and Interpretations of the results are also included.